Retreadfed

rsenn, I don't know how astute your BD guys are concerning the cost principles, but one thing to keep in mind is the IRAD/BP cost principle. bid and proposal costs required by a contract are not generally allowable costs under that cost principle. If the teaming agreement is written with greater specificity, it may be considered a contract so that your BP costs are not allowable. TRW found this out the hard way.

There is a lot to unpack here but let me try. First, I was not being discourteous. You made a statement of principle and I was attempting to explore the scope of the principle you were asserting. This question was based on experience with government contracting officers. I have had situations where the contractor stated its pricing assumptions in its proposal. However, the government was aware that the contract would require much more than the contractor assumed. However, the government never made the contractor aware of its erroneous assumptions. This failure to disclose government superior knowledge misled the contractor into underpricing the contract. The parties would not necessarily have executed an advance agreement. Many contractors would expect the government to abide by agreements concerning price reached in negotiations. Further, in my dealings with contracting officers, I doubt that most of them would go to the trouble of drafting an advance agreement to cover what was agreed to in negotiations. As for the three questions you asked, I would agree if the negotiations were all on a bottom line basis. However, I would disagree if there was a negotiation concerning specific elements of costs. As for your last question, I have to resort to my favorite answer concerning government contract questions - it depends on the facts that are present at the time of the negotiations.

So are you in favor of the government potentially misleading a contractor as to what would be an allowable cost? Would a prior course of dealing allowing the cost on previous contracts have an impact on the allowability of the cost? Would you say the the PNM is not admissible as evidence in a BCA proceeding?

How would the contracting officer do that without following the procedures in FAR 32.6 particularly 32.606?

Ji, note that I asked if it was evidence. Evidence and dispositive evidence are not necessarily the same. Also, can you provide some rationale for your position?

ji, consider this language from a hypothetical PNM: "The contractor proposed an hourly labor rate of $X. We verified this labor rate with DCAA. Further, this same labor rate was proposed and agreed to under other contemporaneous competitively awarded contracts. Based on these facts, I have determined that $X per hour is a reasonable amount for the labor proposed." During contract performance, the contractor paid $X per hour of labor. Do you believe that this statement from the PNM is not evidence of the reasonableness of the cost incurred during contract performance?

This would likely be a government claim against the contractor because the government would likely be seeking to recover costs already paid.

A general thought, have you considered the effect of FAR 31.205-6(p) on your question?

Sprice, I presume you have an attorney. If you are dealing with a DoD contract, have him/her look at 32 CFR 97, particularly the definition of "litigation" and DoD policy on release of official DoD information. Also, read FAR 33.204 and ask him/her to advise accordingly.

Pepe, are you asking what would be reasonable and allowable on government contracts?

ji, in my experience, specific areas of cost, such as labor rates, are negotiated prior to the award of a contract. As a result, the PNM addresses those costs and explains why they were determined to be reasonable and accepted. If those same labor rates are used in contract performance, the PNM is evidence of the reasonableness of those labor rates.

That is a correct statement. However, DCAA frequently questions costs that were specifically negotiated prior to contract award. This is particularly true with regard to labor rates. In this regard, I can see why a contractor would want to obtain a PNM to support the reasonableness of costs. If the contract has been awarded, what harm is there in releasing the PNM to the contractor covered by the PNM? After all, the contractor was a party to the contract award process. Under current FOIA doctrine promoting transparency of government operations, if there is no harm to the government or a third party from release of a document, that document should be released even if it does technically fall within a FOIA exception.

Are you in a pre-contract mode or have the contracts/orders been issued? If pre-contract, the government may be asserting that they are pre-decisional and cannot be released at this time. On the other hand, if the contracts have been awarded, I see no reason why they cannot be released. I know they are available through discovery in litigation without a protective order.

Lukevan, I think you need to get a good government contracts attorney to help you here. I see several problems with what the government is doing that should be addressed by a competent attorney.

Marc, the general contractual records retention obligation is found in FAR 52.215-2. Through that clause, FAR 4.7 is made a term of contracts containing 52.215-2. DCAA guidance on this topic is for internal use only and is not binding on contractors. Further, remember that DCAA audit reports only express DCAA's advice to contracting officer's. Have you looked for contracting agency guidance on this issue or researched board and court cases to see if there has been an interpretation of this requirement?

Have you researched the CAM for an answer?

Was this stated in the subcontract? If not, it likely means nothing under the parol evidence rule.

CFO, you said the subcontract requires the subcontractor to have available receipts in case they are requested. If this is in the subcontract, what is the beef about complying with the terms of the subcontract? Any sidebar agreements between the prime and sub concerning receipts do not mean anything if the subcontract is an integrated contract. It is not clear whether the request for receipts relates to travel charged as a direct cost or travel charged as an indirect cost. We have not seen the exact language of the subcontract, but does the requirement for receipts apply to all travel or just travel that is charged as a direct cost? Finally, what is the subcontractor's policy in regard to paying travel costs. Many contractors merely pay a flat rate for lodging and per diem when employees are on travel. As long as the flat rate is within the maximum allowed by the travel regs for the location, this is an acceptable method of reimbursing employees for travel expenses and does not require any receipts for justification.

Matthew, see CTA, Inc. 00-2 BCA 30,947 and White Sands Construction, Inc. ASBCA Nos. 51875 and 54029. Also, see Glascow Investigative Solutions, Inc. ASBCA No. 58111 (9 April 2013).

Lotus, are you dealing with a supply contract or a service contract?

If the current POP expires before you get funds obligated for the option, do you expect the contractor to continue working? ji is generally correct in what he has stated, however, if the option is not exercised in accordance with the terms of the contract, the contractor is entitled to an equitable adjustment to the contract. Thus, you may get the option, but not at the price you thought.

DoD has issued a deviation to the various FAR clauses that impose a limitation on subcontracting. That deviation adopts the current SBA guidance as the guidance applicable to DoD contracts and orders issued after Dec. 3, 2018.

This clause refers to an agreement instead of a contract. What this means is not clear. However, you have provided nothing to show that the prime has any obligation to issue you any orders or the magnitude of orders that may be issued. Further, this does not address the question of consideration. It is quite likely that you do not have a contract at all, but something in the nature of a basic ordering agreement.

This sounds like you are calling a cost reimbursement CLIN a FFP CLIN.

mrahel, is there something in the subcontract that indicates it is a requirements subcontract? From what you have posted, that seems to be the case. If so, the prime does not have an obligation to issue you any orders. However, the prime would have been required to give you a reasonable estimate of the work to be done. If this estimate is not realistic or based on information that is accessible to the prime, as H2H indicated, the prime may have mislead you into entering into the contract and you would have a claim against the prime. On the other hand, if the contract is not a requirements contract, what is the prime's obligation to issue you orders? Further, what consideration supports the subcontract? Surprising as it may seem, more than one prime contractor has issued a task order subcontract without providing any consideration to the sub.